Are you confused about whether a month-to-month or yearly lease is the better fit for your Denver property? It’s a big decision that affects your income, tenant stability, and overall rental strategy.
Do you prefer flexibility or long-term security? Higher earning potential or steady, predictable rent? There are many things to consider before making your choice.
This article breaks down the pros and cons of a month-to-month lease vs. a yearly lease to help you decide. Choose the lease agreement that best fits your goals as a Denver landlord.
Month-to-Month vs. Yearly Leases: Key Differences, Pros and Cons
When renting out your Denver property, choosing between a month-to-month lease and an annual lease is crucial. Each option offers unique benefits and challenges, depending on your goals as a property owner.
A month-to-month lease automatically renews unless either party gives written notice. It provides flexibility but comes with a higher risk of tenant turnover.
A yearly lease (or one-year lease) is a fixed-term contract, typically lasting 12 months, ensuring stable income and fewer vacancies. However, it limits rent adjustments before the lease terms end.
Pros and Cons of Month-to-Month Leases
Advantages:
- Adjust rent, end the lease, or find new tenants with short notice in a month-to-month lease.
- Charge premium rates for renters on a month-to-month lease.
- Raise the rent more often based on Denver’s rental demand with a flexible lease agreement.
Disadvantages:
- Frequent tenant turnover in a month-to-month lease leads to more empty months.
- More work for property owners with constant lease renewals and signing a new lease agreement.
- No guaranteed rent if tenants end their tenancy on short notice.
Pros and Cons of Yearly Leases
Advantages:
- Stable rental income with predictable rent payments throughout the full term of an annual lease.
- Fewer vacancies mean lower turnover costs for property owners.
- Simplified property management with fewer lease renewals and new lease agreements.
Disadvantages:
- Locked-in rent rates in a one-year lease prevent mid-year increases.
- Ending an existing lease early can be difficult for landlords.
- Selling or renovating your investment property may have to wait until the lease expires.
Questions to Ask Before Choosing a Lease Type
Before deciding on a month-to-month lease or a yearly lease, consider the following:
- How competitive is Denver’s rental market? If demand is high, a month-to-month lease lets you charge higher rent. If it’s low, an annual lease provides a stable tenant.
- Do you plan to sell or renovate soon? A month-to-month lease keeps you from being locked into a long-term lease agreement.
- How much time do you want to spend on property management? A yearly lease requires fewer new lease agreements, while a month-to-month lease needs more hands-on work.
- Are you comfortable with fluctuating income? An annual lease ensures steady rent, while a month-to-month lease may bring unpredictable income due to vacancies.
- What type of rental unit are you leasing? In most states, different rules apply to renting out a house, condominium, or apartment. Understanding these differences is essential.
Make the Right Choice with Professional Property Managers
Choosing between a month-to-month lease and a yearly lease isn’t just about flexibility or stability—it directly impacts your rental income, workload, and long-term investment success. The right lease type helps you maximize profits while minimizing risks and stress.
If you’re unsure which lease structure suits your property best, professional property managers can help. At Mavi Unlimited, we handle lease agreements, tenant screening, property management, and legal compliance so you can enjoy hassle-free rental ownership.
Let us help you maximize your rental income while saving time and effort. Contact us today to discuss the best leasing strategy for your Denver rental!
More Resources:
- Top 4 Denver, CO, Lease Renewal Strategies
- Ways to Maximize Your ROI Through Investment Property Management Strategies
- Property Management Tactics for Maximizing Rental Income